Planning for your retirement is quite literally a lifelong endeavor. Throughout your working career, you will contribute a percentage of your earnings towards the dedicated Social Security payroll tax. These contributions will allow you to claim retirement benefits from the Social Security Administration (SSA) once you reach the age of eligibility which starts at age 62. The idea in theory is that these retiree benefits should allow you to live out your retirement comfortably without any financial pressures, however, due to the general cost of living that seems to be growing exponentially, this may not be entirely possible.
Housing, or rather the costs associated with housing in the U.S. in particular, is making it rather difficult for seniors to live comfortably during their retirement. According to a recent report from Realtor.com, even if their mortgage has been paid off, the majority of seniors still cannot rely solely on their Social Security income. The report reveals that there only ten states in which seniors can live comfortably on Social Security, provided that their mortgages are paid off. Here is everything you need to know.
Can you live on Social Security income alone?
Despite Social Security receiving an annual increase to account for inflation, many seniors still feel that their benefits fall short in sufficiently covering their expenses, as concluded by a Senior Citizen’s League (TSCL) study. Furthermore and according to TSCL, there are close to 22 million seniors who get by on Social Security alone, with at least 75% of all seniors relying on Social Security for at least half their income.
Even if we assume a paid-off mortgage, costs associated with home ownership still remain even if monthly mortgage payments do not. According to Realtor.com’s analysis of median Social Security benefits by state and the Elder Economic Security Standard Index, “the cost of home ownership has jumped 26% as hidden expenses rise. And now, Social Security alone is enough to cover the living expenses in only 10 states.”
Nationally, the shortfall between benefit amounts and the shortfall felt by seniors is on average $230 monthly, or $2,762 annually. Essentially, having a paid off mortgage does not translate to the elimination of housing expenses. Over the past five years, the cost of utilities, property taxes, and home insurance are said to have skyrocketed, thereby requiring seniors to stretch their benefit checks even further.
Top 10 states where you can live on Social Security
According to the report’s findings, there are only ten states where seniors can get by on Social Security alone, sans mortgage payments. Residents of these states can do so due to generally affordable housing costs which allows for a manageable balance leftover from their benefit checks. As per the report, listed below are the ten states in which retirees can live solely on Social Security:
Delaware
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Annual surplus: +$1,764
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Total monthly costs: $1,992
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Monthly housing costs: $555
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Median monthly benefit: $2,139
Indiana
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Annual surplus: +$1,392
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Total monthly costs: $1,900
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Monthly housing costs: $504
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Median monthly benefit: $2,016
Arizona
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Annual surplus: +$1,224
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Total monthly costs: $1,874
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Monthly housing costs: $531
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Median monthly benefit: $1,976
Utah
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Annual surplus: +$888
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Total monthly costs: $1,933
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Monthly housing costs: $530
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Median monthly benefit: $2,007
South Carolina
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Annual surplus: +$828
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Total monthly costs: $1,860
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Monthly housing costs: $486
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Median monthly benefit: $1,929
West Virginia
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Annual surplus: +$660
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Total monthly costs: $1,806
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Monthly housing costs: $398
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Median monthly benefit: $1,861
Alabama
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Annual surplus: +$576
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Total monthly costs: $1,805
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Monthly housing costs: $419
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Median monthly benefit: $1,853
Nevada
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Annual surplus: +$432
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Total monthly costs: $1,805
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Monthly housing costs: $423
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Median monthly benefit: $1,841
Tennessee
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Annual surplus: +$156
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Total monthly costs: $1,870
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Monthly housing costs: $474
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Median monthly benefit: $1,883
Michigan
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Annual surplus: +$132
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Total monthly costs: $2,056
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Monthly housing costs: $531
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Median monthly benefit: $2,067
Top 10 states where its impossible
Conversely, listed below are the top ten states in which living solely on Social Security would be impossible:
Vermont
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Annual shortfall: -$8,088
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Total monthly costs: $2,628
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Monthly housing costs: $838
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Median monthly benefit: $1,954
New Jersey
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Annual shortfall: -$7,512
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Total monthly costs: $2,798
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Monthly housing costs: $1,304
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Median monthly benefit: $2,172
Massachusetts
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Annual shortfall: -$7,345
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Total monthly costs: $2,634
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Monthly housing costs: $1,007
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Median monthly benefit: $2,022
New York
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Annual shortfall: -$7,248
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Total monthly costs: $2,578
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Monthly housing costs: $1,065
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Median monthly benefit: $1,974
New Hampshire
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Annual shortfall: -$6,564
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Total monthly costs: $2,668
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Monthly housing costs: $921
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Median monthly benefit: $2,121
Connecticut
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Annual shortfall: -$5,436
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Total monthly costs: $2,612
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Monthly housing costs: $983
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Median monthly benefit: $2,159
Rhode Island
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Annual shortfall: -$4,164
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Total monthly costs: $2,341
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Monthly housing costs: $740
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Median monthly benefit: $1,994
Alaska
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Annual shortfall: -$4,152
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Total monthly costs: $2,141
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Monthly housing costs: $623
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Median monthly benefit: $1,795
Maryland
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Annual shortfall: -$3,672
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Total monthly costs: $2,390
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Monthly housing costs: $755
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Median monthly benefit: $2,084
Maine
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Annual shortfall: -$3,612
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Total monthly costs: $2,110
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Monthly housing costs: $637
Median monthly benefit: $1,809